Coal as a Future Generation Fuel

1. Coal as a Future Generation Fuel Chris M. Hobson Senior Vice President and Chief Environmental Officer December 3, 2009

2. Southern Company Overview Environmental Generation Financial • $48 B total assets • $17 B revenues • $1.74 B Net Income • 42,600 MW • 303 generating units • 160,000,000 tons coal/yr • $6.3 B completed projects • $3.1B new projects Distribution Fuel Mix Transmission • 27,000 line miles • 3,300 substations • 156,000 line miles • 3.8 million poles as of December 2008

3. Today and Tomorrow – Coal as a U.S. Generation Fuel Current U.S. Generation Mix • Affordable and reliable energy • Dominant energy source for U.S. economy • Emissions down; demand for energy up • Extensive infrastructure for mining, transport and fuel use • No low-cost, short-term, viable alternative • Coal reserves in 38 U.S. states – 1/4th the world reserve • Diverse, well-established, and competitive markets • Capture and confinement technologies developing rapidly Nuclear Other Natural Gas Coal

4. Southern Company Advanced Coal Programs Southern Company Service Territory Kemper County IGCC TRIGTM (65% CO2 Removal w/ EOR) Mississippi Power Company Gorgas Geological Suitables Study Alabama Power’s Plant Gorgas Gorgas Geologic Suitability Studies Alabama Power’s Plant Gorgas Citronelle Oil Field Study Barry CCS 25-MW Demo Alabama Power’s Plant Barry Citronelle Oil Field Study National Carbon Capture Center Wilsonville, Al Barry 25 MW CCS Demo Alabama Power’s Plant Barry Mississippi Saline Test Mississippi Power’s Plant Daniel Mississippi Saline Test Mississippi Power’s Plant Daniel

5. Dongguan City & Kemper County IGCC • Dongguan City, China • 50miles northwest of Hong Kong • Existing 100-MW diesel CC • Repowered for Indonesian lignite • 113 MW (net) facility • May 2011 • Kemper County, MS • Mine mouth lignite • 582 MW • 65% CO2 capture • Gray Water System • May 2014

6. Future Power Generation Options, $/MWh U.S. Average Levelized Cost for Plants Entering Service in 2016 Intermittent $/MWh Source: Energy Information Administration, Annual Energy Outlook 2009, April 2009, SR-OIAF/2009-03

7. Economic and Market Consideration forCoal-Fired Generation • Coal provides stability in fuel/pricing mix. • Natural gas cannot meet projected increases in energy demand. • New nuclear generation is limited by construction timelines and financing. • Most renewables are intermittent, regional, costly and need major development. • Cost reductions and technology developments are expected for CCS. • Significant market exist for resale of CO2 for EOR. • Markets for products associated with IGCC must be developed.

8. Challenges for Coal • Scientific and Technological • CCS • Water and Waste Issues • Further Emission Reductions • Regulatory • Permitting • Monitoring/Certification • Site Closure • Remediation • Social-Political • Political/Public Confidence • Legal • Liability • Ownership

9. Next Generation Coal Permitting • Longer application preparation and agency review process • More external and regulatory involvement in process • Air • Close scrutiny on every proposed limit • BACT/MACT • PM2.5 / Ozone - NAAQS • CO2 • Water (the new Air?) • More difficult water supply permitting • Changing discharge standards • Regional / local water planning boards • Coal Combustion Byproduct disposal • It CAN be done – but expect litigation

10. Closing Thoughts • Major environmental and political issues remain for coal. • The current Administration, Congress, EPA and environmental groups will continue to push for reduced use of coal while providing incentives for renewable energy. • Coal will provide at least 45% of the electric power generated in the United States through the next decade. • Coal remains vital to the U.S. and world economies.

11. Coal as a Future Generation Fuel Chris M. Hobson Senior Vice President and Chief Environmental Officer